July, 2009
The view from Mayfair
From the salons of Mayfair to the sidelines of children’s baseball games in the fancier parts of town beloved of expats, the outrage in London is palpable,write Brooke Masters and Nikki Tait in an FT analysis.
IASB unveils fair value proposals
A radical shake-up of how banks and insurers report the value of financial instruments has been proposed by the International Accounting Standards Board in an attempt to resolve an intense dispute at the heart of efforts to prevent a repeat of credit crisis.
BT faces questions over pension liability assumptions
Britain’s pensions regulator is braced for a battle with BT over its retirement plan, the country’s biggest private sector pension scheme, which could add billions of pounds to a shortfall in savings for tens of thousands of employees and pensioners.
British Airways seeks cash
British Airways is being forced to raise fresh capital to shore up its shrinking cash resources, chairman Martin Broughton told shareholders on Tuesday. While a rights issue has been ruled out, the airline is discussing with investors other ways of raising liquidity,
Intel reports a Q2 pick up
Intel, the world’s biggest chipmaker, reported its strongest pick up in business in more than 20 years, giving a major lift to the PC industry and technology sector on Tuesday. The company reported second-quarter revenues of $8bn,
Flowers works at mending a broken reputation
The first time Chris Flowers invested in Tokyo-based Shinsei Bank in 2000, he went on to personally make about $1bn in what was considered one of the best deals of all time. Now a proposed merger between Shinsei and a second Japanese bank,
CIT’s CDS fallout
A default by CIT, the troubled US commercial lender, could trigger widespread losses for investors in the $600bn market for synthetic collateralised debt obligations. CIT is the second most widely referenced company in synthetic CDOs after Volkswagen,
The DoJ digs into the CDS market
The US Department of Justice has opened an investigation into the credit derivatives market, with demands sent to over a dozen dealers for several years’ worth of detailed information about trading and pricing. The DoJ demands were sent recently to banks with an equity stake in Markit Group,
Solvay weighs just two suitors
Solvay has whittled down the list of bidders for its pharmaceuticals business to Nycomed, the privately held Swiss company, and Abbott Laboratories of the US. A sale could generate more than €5bn for the Belgian chemicals and drugs company.
China scrambles for iron imports
China’s steel industry has been hit with sharply higher spot prices for iron ore as mills scramble for imports ahead of expected import curbs linked to an inquiry involving spying charges against Rio Tinto,
California’s credit rating cut (again)
California had its credit rating cut for the second time in as many weeks over lawmakers’ failure to close a $26 billion deficit that left the most-populous U.S. state issuing IOUs to creditors, Bloomberg reports.
India’s vanishing corporates
The Indian government has launched prosecutions against more than 100 “vanishing companies” that listed on the country’s stock exchanges in the 1990s and then disappeared after failing to meet regulatory filing requirements.
Overnight markets
Data limited due to summer hols at FT Alphaville
Asian markets (Wed)
01:oo BST
Nikkei 9262 +2.34%
Hang Seng 17,886 +3.66%
US markets (Tues)
S&P500 905.84 +0.53%
DJIA 8,359 +0.33%
Nasdaq 1,799 +0.36%
European markets (Tues)
Eurofirst 300 840 +1.2%
FTSE100 4,238 +0.85%
Currencies
01:00BST
€/$ 1.2964 (1.3965)
$/¥ 93.49 (92.97)
£/$ 1.6317 (1.6241)
Sources:
Buy on the rumour, steady on the fact
The price action in Goldman Sachs post results on Tuesday afternoon.
Related link:
Goldman reports Q2 EPS of $4.93 – FT Alphaville
Meredith Whitney is our leader
David Rosenberg’s latest morning note has some interesting observations on the behaviour of investors and the cult of personality that seems to have arisen around former-bank slayer Meredith Whitney:
We thought that the ability of one person to move the market went out three decades ago with Henry Kaufmann over at Salomon Bros.,
The IASB does fair value
Behold the International Accounting Standards Board’s proposed revisions to IAS 39.
IAS 39 being an accounting principle at the centre of much controversy in recent months and even years. The standard sets out how to value financial instruments,
Goldman’s getting riskier
This morning we were struck by the following paragraph in a New York Times article:
While others are shying away from risks, Goldman is courting them. A common measure of risk-taking at Goldman and other banks is known as value at risk,
Goldman, bonuses all around
This is unlikely to engender any good public feeling for the investment bank.
From the just-released Q2 earnings.
Compensation and benefits expenses (including salaries, estimated year-end discretionary compensation,
Goldman reports Q2 EPS of $4.93
This is on the Goldman Sachs site already. The full press release is “not found”.
Goldman Sachs Reports 2009 Second Quarter Earnings Per Common Share of $4.93
Analysts had expected something like $3.54.
Lunch Wrap
On FT Alphaville Tuesday morning,
- The BoE’s axeman speaks.
- CIT would be the fourth-largest bankruptcy in US history.
- Quick Goldman results primer.
- Surviving prison, the financier’s way.
Markets live transcript 14 Jul 2009
Markets live chat transcript for the chat ending at 12:06 on 14 Jul 2009. Participants in this chat were: Neil Hume, FT (NH) Paul Murphy, FT (PM) NH:Bonjour NH:Vive la Revolution
Airplane graveyard forensics
When airlines retire their aircraft — or simply decide to temporarily cutback capacity — they send their airplanes to hangars, or in some cases, to places like the Mojave desert in California. So-called ‘Airplane graveyards’ in the region look something like this:
The BoE’s axeman speaks
Adam Posen, the new addition of the Bank of England’s monetary policy committee, has been speaking on Tuesday morning at his appointment hearing before Parliament’s Treasury Committee.
And true to form Posen,
CIT would be the fourth-largest bankruptcy in US history
The short-term financing crisis over at CIT is gaining momentum after Moody’s slashed the corporate lender by four levels to B3 from Ba2 on Monday.
By the way, if you’ve not heard of CIT, this is probably a good time to get acquainted with the company.
Quick Goldman results primer
There’s really only one thing that matters today and that’s second quarter results from the IB everyone loves to hate: Goldman Sachs.
The figures will hit the tape at 13.30 (8.30 ET) with a conference call scheduled for for 16.00 (dial 1-888-281-7154 US,
Going from the exchange floor to the prison yard? (updated)
If so, Wall Street Prison Consultants is here to help.
Sign up for Fedtime 101, a federal prison survival telephone crash course “designed to help you get out alive.” Fees start as low as $1499 and you can settle your bill via PayPal.
Imitation alpha
Look what hit the FT Alphaville inbox on Monday evening.
It is a press release from the IQ Alpha Hedge strategy fund, which claims to be the first no-load, open-end mutual fund designed to “replicate broad-based hedge fund performance characteristics.”
On the (de)merits of small banks in developing countries
Over at the Economist’s Free exchange blog, a handful of top-flight economists (as one would expect) have been engaged in a lively debate on the optimal size and complexity of developing countries’ financial systems.
Further reading
Elsewhere on Tuesday,
- “While others are shying away from risks, Goldman is courting them.”
- Fixing the shadow banking system.
- The latest on Latvia.
- “Failure of another big audit firm is the elephant in the room.”
Pink picks
Comment, analysis and other offerings from Tuesday’s FT,
Gideon Rachman: China is now an empire in denial
When the Soviet Union collapsed in 1991, it suddenly became obvious that the USSR had never been a proper country.